If you’re looking to reduce your debts without getting into a debt consolidation program, there are things you need to consider.

  1. Stop using credit cards. Hide them, freeze them, or perform a plasticomy. Use either a physical envelope budgeting method and take out money you need to eat, tolls, etc. If you run out of money, then make a peanut butter and jelly sandwich or bring leftovers for lunch.  If you want a more electronic method, keep track with your spending using a program like Mint.
  2. Discover the exact amount of debt you’re in. You can’t come up with a plan until you know what you owe. List all your creditors, the interest rates, and the total amount you owe.
  3. Work to see if you can lower your interest rates. If you can’t negotiate a lower interest rate, you may consider choosing a 0% card to transfer your balance. Please remember, balance transfers are a temporary fix and do not address the root problem.
  4. Control your spending and write a simple budgetTrack what you spend in 2 to 4 weeks. It’s hard to cut back if you don’t what your weak points are, so grab a little notepad and write everything you spend.
  5. Automate your bills and put aside some money for savings. Protect yourself from yourself and automate your debt payments. Try to pay the minimum on all but one of your debts.  Put the rest of your debt reduction money into either your debt with the highest interest rate or the lowest balance. Highest interest rate method is the financially sound decision and lowest debt is the psychologically empowering decision. If you’re looking for money to reduce debt, try cutting unnecessary expenses or get a part time job exclusively for your debt repayment.
  6. YOU have to be committed to a plan and stick to it. Have your spouse, friends, family, etc. support you as you reduce your debt.

Your Take

What tips do you have on keeping your finances in check?

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